The GBP/USD currency pair fails to prolong its corrective pullback from the weekly low.
The EU-UK tensions over departure problems are exacerbated by the Brexit bill.
Even as greater infections threaten the July 19 deadline, restrictions for UK passengers returning to England are being eased.
The UK’s monthly economic announcements for May can be entertaining for traders, but Brexit is becoming increasingly important to monitor.
GBP/USD is trading around 1.3790, with buyers taking a breather in the early Asian session on Friday. The European Union (EU) and the United Kingdom (UK) recently had another spat over Brexit, and the cable that bears the brunt of the coronavirus (COVID-19) resurgence at home was also disputed. Traders are cautious, though, as the monthly data dump approaches.
Even as the ex-neighbors struggle to overcome differences on the Northern Ireland (NI) protocol and fishery concerns, among many other departure issues, the Financial Times (FT) published information indicating that another, older, hitch in the Brexit negotiations had arisen. “Brussels and London were locked in a debate on Thursday over the magnitude of the UK’s Brexit bill,” the news reported, “after the EU stated that Britain would be obligated to pay EUR47.5 billion (GBP40.8 billion) as part of its post-Brexit arrangements.”
Covid infections at home, on the other hand, are at an all-time high since early January, posing a test to UK Prime Minister Boris Johnson’s “Freedom Day” promise. According to Reuters, Britain reported 32,551 new COVID-19 cases and 35 deaths within 28 days of a positive test on Thursday, according to official government data. In comparison, 32,548 cases and 33 deaths were reported the day before. ” The virus’s difficulties aren’t limited to the United Kingdom; recent reports from the United States estimate that over half of the covid infections reported in the last two weeks are of the Delta type. Australia, Indonesia, South Korea, and Thailand are among the countries that have lately battled the illness. Concerns grow as word spreads that the germs are resistant to vaccines.
In the midst of these maneuvers, Wall Street benchmarks fell, and US 10-year Treasury rates fell to a five-month low. However, neither the US dollar index (DXY) nor GBP/USD prices have benefited from the risk aversion wave.
As recovery optimism fade in the West, the UK data dump for May, which includes monthly Industrial Production, Manufacturing Production, Trade Balance, and GDP releases, will be the primary catalyst for GBP/USD. The British economy is expected to fare poorly in May, according to forecasts. However, if the US currency remains down, the slow unlocking subsequently may keep pair purchasers hopeful. Above all, the importance of covid and Brexit headlines cannot be overstated.
GBP/USD values are heading towards the 200-DMA level around 1.3670 after a clear bearish break below a five-month-old support line. Corrective retreat, on the other hand, must pass a declining resistance line from June 23, around 1.3865./n
